Introducing enhanced annuity product and calculating its payouts for the insureds with different cancers using adjustment approaches of possible mortality

 One of the most important issues that insurance companies face when introducing new insurance products is how to price such products. In this article, in addition to introducing the increased annuity product, the payments of this product for cancer insureds, taking into account the probability of death or survival have been calculated for use in the country's insurance industry.

 This research is of a quantitative type and in it, the amount of annuity insurance payment increased for the insured who are cancer patients, for a single net insurance premium, is calculated using two different approaches to adjust the probability of death. Also in this research the data of the American Cancer Society and the list of technical profit rates announced in the supplement of Regulation No. 68 of the Supreme Council of Insurance, as well as the announced data table of the Iranian life insurance at the year 2021, were used.

 In this article, the effect of adjusting the mortality probability using “adjustment multiplier” and “age rating” approaches on the amount of annuity payouts for insureds of different ages were investigated. It is expected that with an increase in the adjustment factor, which means an increase in the insured's health problems, the life expectancy will decrease and the amount of pension payment will increase, which the findings of the article also confirm this issue. In addition, based on the relative survival assessment of 5 years and with the amount of pension payment for the insured, the life expectancy using the adjustment factor and the increased amount of pension payment for the 65-year-old insured with various cancers of the breast, colon, lung and skin with Standard health status was compared. Based on the findings of this research, local skin cancer and local breast cancer with a 5-year survival probability of 99% have the lowest pension payment increase of 2.13%. On the other hand, diffuse lung cancer and diffuse colon cancer with survival probability of 8 and 15 percent, have the highest increase in pension payments, i.e. 413.57 and 309.47 compared to standard pension payments. The fuzzy payout of annuity for the insured with local skin cancer and local breast cancer was obtained the interval [161/04, 167/88], and the payout of age rating approach with the value of 167/34 is also included in this interval. It should be noted that, in general, the payout of the “age rating” approach is higher than the “adjustment multiplier” approach.

 If a person has a certain health condition, the mortality and survival probability, as well as life expectancy, will be different from the standard state. For this purpose, an adjustment factor is considered for the mortality probability, and the annuity payout will be adjusted accordingly. In this article, the amount annuity payouts for the insured with different types of cancer was investigated, compared and analyzed based on two different adjustment mortality probabilities approaches.